Navigating tariffs: initial challenges for UK automotive employers

The imposition of a 25% tariff on automotive imports by US President Donald Trump will create significant challenges for UK automotive employers.

The recent imposition of tariffs by US President Donald Trump has sent shockwaves through the global automotive industry, with likely significant repercussions for UK automotive employers. These tariffs, which include a 25% levy on automotive imports, have created (beyond what was already) a challenging environment for UK manufacturers and their workforce.

With 80% of cars produced in the UK being exported and the US being the second largest market to receive these, the imposition of tariffs is expected to significantly reduce the supply of cars to the US. This downturn is likely to compel automotive companies to consider restructuring their operations. The increased costs associated with exporting vehicles and parts to the US may necessitate cuts in production and the associated workforce by UK employers.

Navigating change

Automotive employers in the UK must navigate these changes carefully, considering the legal implications of potential restructures and redundancies. We have already noted the potential impact of workforce restructuring in 2025 for automotive employers as a consequence of failing demand (see our recent article Navigating automotive workforce restructures amid falling UK car production). It is essential for employers to review their redundancy policies and should ensure compliance with UK employment laws, including fair consultation processes and redundancy payments. Additionally, companies may need to explore alternative strategies such as reskilling employees for different roles within the organisation or fostering a more globally mobile workforce to counteract the effects of job losses when considering the need to right-size operations.

For employers dealing with the tariffs, a globally mobile workforce will be a crucial advantage. Automotive employers may engage in localisation, building manufacturing bases in the US requiring talent to be sought outside the UK. Alternatively, automotive employers may choose to pivot to focus more on the EU where there are currently no tariffs in place which again may provide for some new opportunities locally and overseas for any UK employees at risk of redundancy.

The tariffs could also hinder the retention of international talent, as the financial constraints caused by increased costs and reduced production impact UK automotive companies. These budgetary pressures might force employers to restructure their workforces as noted above, which in turn could affect their ability to retain skilled international workers.

Maintaining innovation

The uncertainty and potential instability in the automotive sector following the imposition of tariffs may also deter skilled workers from seeking employment in the UK. Consequently, automotive employers might struggle to attract new international talent, which will be essential for maintaining innovation and securing the best talent available. For more on the wider impact of US tariffs on innovation in the UK, see our article here.

It is clear that the tariffs will undoubtedly present challenges for UK automotive employers, particularly in terms of employment and immigration considerations. It is important that employers remain alive and proactive when reviewing their workforce strategies to ensure legal compliance. By exploring alternative solutions and adapting to the evolving landscape, UK automotive employers can maintain their competitiveness in the global market and aim to thrive despite these obstacles.

More information

For more on the impact of US tariffs on the wider automotive industry in the UK and Europe, read our joint article with Heuking Kühn Lüer Wojtek here.